Many individuals who purchase gold are unclear on its tax implications, including whether or not you need to report it to the Internal Revenue Service (IRS). Ultimately, whether this requirement exists depends on various factors like what type of gold and its value you purchase.
Cash or cash equivalent payments of more than $10,000 USD should generally be avoided; those transactions trigger reporting requirements for dealers.
What is a 1099-B form?
The 1099-B form is a legal document required of precious metal dealers in order to report profits made from customer sales of precious metal products. This requirement aims to prevent individuals from using precious metal sales as an unreported source of income; specific conditions that trigger reporting include any sale listed on the IRS “Reportable Items List,” fractional gold coins sold and sales of large quantities of certain bullion products.
Customers still owe capital gains taxes when selling these assets for profits, so those looking to purchase and sell coins for profit must consult a tax professional prior to undertaking any major transactions. Careful record-keeping should be implemented as well, including logging all purchases, sales and transfers relating to personal accounts to provide clarity should there be a future tax investigation.
What is a 8300 form?
Gold dealers must file an 8300 form with the state and federal governments when receiving payments of $10,000 or more paid in cash for precious metal purchases. This requirement serves to prevent money laundering. This form reveals payment information as well as personal data about those paying with cash.
Regulations surrounding the purchase and sale of bullion coins and bars can be complex, and any major investment decisions should always be reviewed with an expert before being implemented. Under some circumstances, precious metal dealers must report your purchases to the IRS.
Consider this example: Let’s say you walk into a coin shop and buy one gold coin for $8,000. Three or four hours later, you return and purchase another for $3,000 cash; both transactions must be reported to the IRS because both involved cash payments exceeding $10,000. Buying and selling rare coins must comply with similar regulations as investing in stocks, bonds, and real estate.
What is a 1099-B exemption?
Not the cash transaction alone but rather how much the purchaser pays in total for bullion will determine its tax treatment. When physical gold and silver are sold to individual investors in large sums of fiat dollars (measured against real dollars), any profits from sales of bullion are subject to short-term capital gain tax at their normal income tax rates.
Reputable dealers tend to discourage large cash payments for gold by encouraging alternative forms of payment such as wire transfers or money orders; additionally, these purchases must be reported legally under $10k as these help the government monitor large commodity exchanges and prevent potential money laundering schemes.
Reporting requirements for coin sales differ significantly from those applicable to bars and rounds sales, such as those sold directly to individuals by dealers. As an example, dealers who sell 1 oz Gold Maple Leaf coins, Kruggerand coins or Mexican Onza coins to individual purchasers must report them. Likewise any US coin composed of 90% silver must also be reported.
What is a 8300 exemption?
While there is no central database to record all gold and silver purchases, the IRS does have reporting requirements for certain sales based on both amount sold and payment method accepted.
Under federal money laundering laws, dealers are legally bound to notify the IRS whenever an investor pays with cash for purchases totalling $10,000 or more.
Online bullion dealers tend to discourage large payments of this nature by accepting only bank wire transfers, ACH, credit or debit cards, PayPal or similar methods of payment as these methods have undergone the appropriate KYC / AML due diligence checks.
Keep abreast of federal laws affecting gold buying and selling experiences, and stay knowledgeable of how they apply to you personally. Proper record-keeping and consulting a professional advisor are crucial steps towards compliance with anti-money laundering legislation.